Civil War in the FEHBP Risk Pool

Unless you are planning to check out (literally) no later than age 50, or you know you are going to win a mega-million-dollar lottery this one is for you.

When it comes to a health insurance plan, many of us (feds or private sector) would like the best of both worlds. That is a group plan but one tailored specifically to us.

Many young, healthy people resent having to pay group rates when the group covers lots of very old, very sick retirees or their survivors, as the FEDBP does.

Many retirees resent paying group, experience-rated premiums for young people who have potentially dangerous hobbies, ranging from cycling and rock climbing to having lots of children.

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Many husband/wife-only couples resent paying the same premiums as the Brady bunch in the same plans.

Many feds (average age 47) think it is unfair to be lumped in a risk pool with millions of seniors who usually have more aches, pains and medical requirements. This changes, of course, as their birthday cakes begin to resemble controlled forest fires.

Like it or not, all federal and postal workers and retirees, regardless of age, sex, habits, medical conditions and age are in the same risk pool. And as yesterday’s column pointed out, are likely to stay in the same pool.

So, is that a good thing?

Walton Francis, the top expert on the FEHBP, thinks it is. He had a long distinguished career at HHS, and is the author of CheckBook’s Guide to Federal Health Plans which helps millions pick the best deal for them during each annual open season. So what does he say about the plan to maintain the current FEHBP risk pool and pay some or all of Medicare Part B premiums for retirees?

Here’s what he says:

“This is a great move by OPM. (Actually not new, as they first floated it last year.) I’m really glad NARFE is on board. This shows they are using their brains, with the long term interests of retirees coming first over short term grandstanding. They have some talented people there!

“This parallels a recommendation I have been making for years; at least twice in testimony to the House oversight committee and last fall in my book ‘Putting Medicare Consumers in Charge: Lessons from the FEHBP.’

“I passed on my proposal to CBO in 2008 and they scored it as saving a cool billion dollars a year in their budget saver book. That is real money, not smoke and mirrors like the idiotic proposal to have the FEHBP waste money by trying to use Medicaid methods to pay for drugs. (In all honesty, however, Medicare gets most of the dollar savings since it is primary payer for most retirees).

“As to benefits to enrollees, they are potentially massive. First the retirees themselves will get inexpensive ‘political protection’ by enrolling in both Medicare Part B and the FEHBP, at little or no, or at least much less, additional premium cost. Right now, a retiree may have to almost double her premium cost to enroll in both programs. With Medicare insolvency looming, this is no small gain.

“Second, they can use Medicare Part B to go out of the plan’s preferred provider network. This is a great access increase regardless of plan in which enrolled (e.g., Blue Cross Standard, Blue Cross Basic, GEHA Standard, and any HMO). At the very least they get a better network, and in the case of HMOs a vast network expansion. While you can go out of network in most national plans, you are likely to pay half or more of the physician charge, compared to only 20% under Medicare.

“Third, because they gain this flexibility they can stick with a lower cost plan that they like, such as an HMO or Blue Cross Basic, without virtually being forced into another choice.

“Fourth, everybody gains because premiums are lower when costs are lower, and costs will be lower if some cost sharing is preserved into retirement. (The saving of this reform compared to ‘free’ health care waste was the basis for the CBO billion dollar cost saving estimate.)” Walt Francis

More than 99 percent of all species that have lived on Earth are now extinct.

(I’m just glad the ones that are left are so tasty in butter.)

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